Govt freezes Vodafone-Idea’s dues, grants 5-year moratorium on payments
The Union Cabinet, led by Prime Minister Narendra Modi, has frozen Vodafone-Idea's AGR dues of Rs 87,695 crore, allowing the compnay to start paying from FY2031-32 and clear the amount by 2040-41
New Delhi: The government on Wednesday approved a major relief package for Vodafone Idea, freezing its outstanding dues and approving a five-year moratorium on payments, providing a critical lifeline to the debt-laden telecom operator.
The Union Cabinet, headed by Prime Minister Narendra Modi, agreed to freeze AGR dues of Vodafone-Idea Ltd (VIL) at Rs 87,695 crore, which the struggling company has to start paying from 2031-32 fiscal and clear by 2040-41, sources aware of the decision said.
AGR dues refer to payments owed by telecom companies to the government based on Adjusted Gross Revenue (AGR). It is the revenue on which telecom operators must pay licence fees and spectrum usage charges. It is defined to include all revenues, even non-telecom income (like interest, rent, asset sales).
Besides these outstanding, the AGR dues for FY2017-18 and FY 2018-19, which were finalised based on the Supreme Court order of September 2020, will now have to be paid over 2025-26 to 2030-31 fiscal without any change, they said.
Vodafone Idea has been battling a prolonged financial crisis, driven by intense price competition, high debt, and massive AGR liabilities that arose from a change in the definition of AGR. The company has struggled with persistent losses, a shrinking subscriber base, and limited ability to invest in network expansion, even as rivals accelerated 4G and 5G rollouts.
Repeated rounds of government relief and equity conversion of dues have kept the company afloat, but its long-term viability continues to hinge on sustained policy support, fresh capital infusion, and a turnaround in operating performance.
Some had expected that the Cabinet would waive a part, if not all, of the AGR dues. But instead, it decided to give a moratorium, which would allow the company to recover. The dues that have been frozen will be reassessed by a committee based on audit reports, sources said, adding the outcome shall be binding on both parties.
Sources said the decisions taken by the Cabinet were to protect the interests of the government, which now has a 49 per cent stake in VIL. It will also enable orderly payment of dues to the government, ensure competition in the sector and protect the interests of 20 crore consumers of the company.
